U.S. House Foreclosures Soar To Record 1.249 Million; Hike Also Seen In New Delinquencies

Washington, D.C. (AHN) - Home foreclosures in the United States soared to a record 1.249 million in the second quarter of 2008 with homeowners squeezed between rising interest on adjustable rate mortgages and still-falling home values.

For the first time in the 29 years that the Mortgage Bankers Association has issued its foreclosure survey, new foreclosures rose above the 1 percent rate to 1.19 percent during the second quarter.

Even worse, the 490,000 new foreclosures for the quarter were up by 9 percent from the 48,000 starts recorded in the previous quarter. MBA members currently service 45 million mortgages.

And there is no sign that things will improve soon. Both foreclosures and the number of delinquent loans are the highest ever recorded by the survey.

During the second quarter this year an additional 2.9 million homeowners became delinquent on their mortgages, meaning that the number of people who fell behind on their mortgage payments is up by 25 percent over a year ago. During the same time, foreclosures have doubled.

The problem is expected to continue with the worsening economy. The unemployment rate has risen to a five year high of 6.1 percent with 84,000 lost in the last reporting period and a total of 605,000 jobs since January.

That makes it harder for people who lose a job to find another one and makes it more likely that more people will be unable to pay their mortgage. That means falling house prices will probably fall further until the median house price is affordable for the average American worker's median salary.

However, observers say that with the number of underemployed workers rising, who are earning less than they once did, or less than they need to earn, what that average median income will fall to is not known.